FTSE helped by weaker pound; Shire, Virgin get takeover boost

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* FTSE 100 up 0.2 pct; mid caps up 0.5 pct

* Shire gains after Takeda agrees takeover

* Virgin Money boosted by CYBG takeover offer

MILAN, May 8 (Reuters) - The FTSE edged up on Tuesday after a long weekend as a drop in the pound supported the internationally exposed index, while takeover activity boosted shares in drug-maker Shire and Virgin Money bank.

By 0756 GMT, the FTSE advanced 0.2 percent at three-month highs, while the mid-cap FTMC index added 0.5 percent. London markets were closed on Monday for a bank holiday.

“The (FTSE) index is...supported by a still depressed GBP while USD remains strong, both currencies at opposite ends of the spectrum of rate hike expectations ahead of their next policy meetings, the BoE this week and the Fed in June,” Accendo Markets analysts said in a note.

Shire rose 3.7 percent at 4000 pence, leading gainers on the FTSE. Takeda agreed to buy the rare disease specialist for 45.3 billion pounds on Tuesday after the Japanese company raised the amount of cash in its offer to secure a recommendation.

Shire traded below the agreed price of 4817 pence, reflecting that the deal would only be completed next year, traders said.

“We expect Shire shares to...trade at a relatively wide 10-15 percent spread to the offer given close is not anticipated until the first half of 2019,” Jefferies analysts said in a note, adding the offer price was reasonable.

Elsewhere, declines in the pound helped big international companies such as Unilever, Imperial Brands , Compass and Experian advance.

Royal Mail was the biggest loser among British blue chips, falling 1.7 percent, following a disappointing update from German peer Deutsche Post DHL.

Sky fell 1.2 percent after U.S. cable operator Comcast formally notified the European Commission of its intention to bid for Britain’s pay-TV group, a source told Reuters.

Still in M&A, Virgin Money said that it received an 1.6 billion pounds all-stock takeover offer from rival CYBG , sending its shares up 8.5 percent. CYBG, which owns Clydesdale and Yorkshire Bank, also rose, up 1.5 percent.

Shares in other mid-sized lenders Metro Bank and OnesavingsBank also rose in response to the takeover offer, a sign that long-awaited consolidation of Britain’s so-called challenger banks could be starting.